Posted: 21 Apr '16

Whats Preventing Your Mortgage Approval

One of the most exciting times in your life and one of the most stressful is closing the deal on your first home. You've gone through the negotiation phase like a champ, gritting your teeth during the rebounding with the seller and now your terms and conditions are set. You have all of your paperwork for your first time home buyer loan application and all systems are a go.

While waiting for the call to happily sign on the financing conditions, you arrange the movers, set up your Internet and phone service and get your utilities set up so you won't freeze. Everything is ready for your big move-in date, but at the last minute, your mortgage broker calls and lets you know that your financing isn't approved.

Kissing Your Approval Goodbye

Although you had pre-approval for your mortgage and thought your financing was secure, there are things you may have done since then that killed your chances at final approval. Your pre-approval is based on the information given to the bank at the time of your application. When it's time to close on your deal, the lender goes through your application again and if anything has happened to negatively effect your credit, your approval will not go through. There are the four most common mistakes that will prevent your mortgage approval:

  1. Change in employment or income- Mortgage lenders and insurers all have specific criteria for employment income to qualify for financing. If you change your employment or accept a new position at your current company that includes a bonus as part of your income, that income will not be considered until you can show two years' worth to prove stability. Other examples requiring a minimum of two years as proof of income include self-employment, commission and overtime pay, even if mandated as part of your job.
  2. Increase of your debt load- With 12 months no payment and no interest, you can afford to load your new home with furniture before you move in, right? Wrong. The same goes for buying a new vehicle or loading up your credit cards. Your pre-approval is based on the debt load you're carrying when you apply and may be denied due to an increase.
  3. Down payment- If you make a change to the source of your down payment such as borrowing instead of a gift or savings, your lender may deny your first time home buyer loan.
  4. Credit rating- Make all payments on time and do not apply for more credit. Any negative changes to your credit rating can put your financing in jeopardy.

Buying your first home is stressful enough, which is why our mortgage brokers on the Dominion Mortgage Team at Dominion Lending Centres, we will guide you through the steps of getting your first time home buyer loan in Alberta because we know the last thing you want is to get your mortgage application denied. Contact us today and talk to one of our experienced mortgage brokers.

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